GOHAR PLASTIC CARPET MAT PRODUCTION

FEASIBILITY STUDY

Name and address of the promoter:

 Name of the promoter: Gohar Trade and Apartment S.c.
 Project Address: - Bahir Dar
 Contact person: Muhammed Hussen
 Mobile: +251918703080

Submitted to: Development Bank of Ethiopia, Bahir Dar District

July, 2020
Bahir Dar- Ethiopia

PREPARED BY: ERZA CONSULTING PLC

 ADDRESS: BAHIR DAR
 KEBELLE-07
 AMBAYE BUILDING, B-11
 MOBILE: 0912902525 I
Table of Contents
List of tables ................................................................................................................................... iv
Executive summary......................................................................................................................... 1
1 Introduction and Background .................................................................................................. 3
1.1 Introduction ...................................................................................................................... 3
1.2 Company Background ...................................................................................................... 3
1.2.1 Address ................................................................................................................................................3
1.3 Brief history of the Company ........................................................................................... 4
1.4 Credit Information ............................................................................................................ 4
1.4.1 Credit information with other banks ....................................................................................................4
1.5 Production and Sale Performance of the Company ......................................................... 4
1.6 Ethiopian Economic Policy and the Private Sector .......................................................... 4
1.6.1 The policy Environment ......................................................................................................................4
1.6.2 The Seconded Five Year Growth and Transformation plan (2015/2016 -2019/2020) ........................4
1.7 Beneficiary of the of the project ....................................................................................... 5
1.8 Product description and application ................................................................................. 5
1.9 Justification of the project ................................................................................................ 5
1.10 Supporting for the project ................................................................................................ 6
1.11 Goal and objective ............................................................................................................ 6
1.11.1 Over all-goal ........................................................................................................................................6
1.11.2 Objective of the Project .......................................................................................................................7
1.12 Key Success and Risk Factors .......................................................................................... 7
1.12.1 Key Success Factors ............................................................................................................................ 7
1.13 SWOT Analysis................................................................................................................ 7
1.14 Mitigation Mechanisms for Weakness and Threats ......................................................... 8
2 Market feasibility Analysis ...................................................................................................... 9
2.1 Market Potential ............................................................................................................... 9
2.2 Past Supply and Present Demand ..................................................................................... 9
2.3 Demand Analysis ........................................................................................................... 10
2.4 Pipeline projects in Pvc Carpet products manufacturing ............................................... 11
2.5 Marketing Strategy ......................................................................................................... 11
2.5.1 Promotion .......................................................................................................................................... 11
2.6 Pricing Strategy .............................................................................................................. 11
2.7 Sales Forecast ................................................................................................................. 12
2.8 Distribution system ........................................................................................................ 12

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 2.9 Global Market tends of Ethiopia .................................................................................... 12
3 Technical Analysis ................................................................................................................ 13
3.1 Location of the project ................................................................................................... 13
3.2 Civil Engineering Cost ................................................................................................... 13
3.3 Plant capacity ................................................................................................................. 13
3.4 Production program ........................................................................................................ 13
3.5 Production Process ......................................................................................................... 14
3.6 Plant Machinery and Equipment .................................................................................... 17
3.7 Raw Materials and Inputs ............................................................................................... 19
3.8 Input output ratio ............................................................................................................ 19
3.9 Utilities Requirements .................................................................................................... 20
3.10 Project implementation schedule ................................................................................... 20
3.10.1 Activation and organization activities ............................................................................................... 20
3.10.2 Operational activities ......................................................................................................................... 20
3.10.3 Construction and Erection ................................................................................................................. 21
3.10.4 Performance testing activities ............................................................................................................ 21
4 Organization Management and Man Power Analysis ........................................................... 22
4.1 Organization Structure ................................................................................................... 22
4.2 Management ................................................................................................................... 23
4.3 Stockholders analysis ..................................................................................................... 23
4.4 Manpower requirement .................................................................................................. 23
4.5 Manpower Training ........................................................................................................ 24
5 Financial Analysis ................................................................................................................. 25
5.1 Underlying Assumption ................................................................................................. 25
5.2 Working capital .............................................................................................................. 25
5.3 Total Investment Outlay ................................................................................................. 26
5.4 Source of fund for the project ........................................................................................ 26
5.4 Production cost ............................................................................................................... 27
5.5 Investment Appraisal...................................................................................................... 27
5.5.1 Profitability........................................................................................................................................ 28
5.5.2 Ratios ................................................................................................................................................. 28
5.5.3 Break-even Analysis.......................................................................................................................... 28
5.5.4 Pay-back Period ................................................................................................................................. 29
5.5.5 Internal rate of return ......................................................................................................................... 29
5.5.6 Net Present Value .............................................................................................................................. 29

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6 Economic Feasibility ............................................................................................................. 30
6.1 Profit Generation ............................................................................................................ 30
6.2 Tax Revenue................................................................................................................... 30
6.3 Employment and Income Generation ............................................................................. 30
7 Political feasibility ................................................................................................................. 30
8 APPENDIX ............................................................................................................................. 1

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List of tables

Table 1: import of PVC carpets and domestic production (tons) ................................................... 9

Table 2: Projected Demands (Tons) ............................................................................................. 10
Table 3: Project construction area and construction cost.............................................................. 13
Table 4: Annual production program ............................................................................................ 14
Table 6: list of machinery and equipment..................................................................................... 17
Table 7: Furniture and office equipment ...................................................................................... 18
Table 8: Raw material requirements in Plastic household products production annually ............ 19
Table 9: Utility Expenses .............................................................................................................. 20
Table 10: Project implementation schedule .................................................................................. 21
Table 11: Man power required for the project .............................................................................. 24
Table 12: Financial Assumptions for the project .......................................................................... 25
Table 13: Pre- Capital Expenditures ............................................................................................. 25
Table 14: Initial working capital ................................................................................................... 26
Table 15: Total investment cost ................................................................................................... 26
Table 16: Annual production cost at full capacity ........................................................................ 27
Table 17: Financial Ratio’s ........................................................................................................... 28

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 Executive summary
Name of the project: - Plastic Carpet mat production factory
1. Name of the promoter: - Gohar Trade and Apartment S.c.
Address: Bahir Dar, 16 kebelle
Mobile:- +251918703080
2. Location of the Project: Region: Amhara Regional State, Zone: Bahir Dar, Woreda: city –
Bahir Dar
3. Objectives of this Plastic Carpet mat production factory development: -
The project is being established primarily to invest and large scale Plastic Carpet mat
manufacturing project, to ensure high production of and develop access to the international
market to ensure and improve high income of the promoter and to improve the foreign currency
deposit and support the economic Growth of the country.

Secondary objectives of the project which certainly have direct link to the achievement of the
primary objectives are to the ensure production of Plastic Carpet mat production s of high quality
and quantity, to introduce the PVC Carpet mat production processing technologies to the
locality, to ensure availability of good Plastic Carpet mat production from recycled and imported
resigns, to create employment for 149 permanent workers which lowers the unemployment rate
of the country.

4. The project size

The project has the total capacity of 2,400 ton of Plastic Carpet mat products per year. But in the
first stage the project will start from 80% of from its own capacity and working days of the
project per year will be 300 days in two shifts.
5. Initial investment
 Total initial investment = Birr 52,591,455.16
 Of which Birr 38,648,300.99 is earmarked to finance fixed assets
 The balance of Birr 13,683,154.17 is provided to meet the working capital requirement
of the project.
 Pre- operational cost of the project 260,000

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6. Source of and the required finance
 Owners’ equity is (25%): 13,147,863.79

 Bank loan in the form of machinery lease (75%) 39,443,591.37

8. Appraisal Criteria:-
 NPV= 159,877,818.74 since NPV is positive the project is viable and feasible to
implement.
 payback period 2.26 years
 Internal Rate of Return (IRR) = 45%

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1 Introduction and Background
1.1 Introduction
This Feasibility Study aims to assess the commercial and financial viability of Plastic Carpet mat
production in Amhara Regional State, Bahir Dar city. Gohar Plastic Carpet mat production
Project is a new private enterprise owned by Gohar and established in accordance with the
Commercial code of Ethiopian and relevant laws to operate as business entity in Ethiopia.

The purpose of the study is to serve Gohar Plastic Carpet mat Production Project is to make
investment decision as to whether to implement or not the project and access loan from
commercial bank of Ethiopia. The Feasibility Study will also serve as input to different
concerned organizations such federal and/or Regional Investment Offices, Environmental
production Agency, etc

Thus, with the market study focusing on the input and output aspects of the project, the
organization and management, the financial development of the project, environmental issues
and socio-economic benefits, the document has included various published and unpublished
documents, internet sources and the likes. Accordingly data were gathered from different
institutions and individuals.

The Feasibility Study is structured into different chapters. It starts with executive summary
(followed by providing Background Information, Study of the project site, Socio Economic study
and environmental impact assessment study in section, market study, financial studies of the
project, and plan operation is described under the project.

The organization and Management of the project is analyzed and the monitoring and evaluation
is the final part of the project feasibility.
1.2 Company Background
1.2.1 Address
 Name: - Gohar Plastic Carpet mat production
 Address:-Region ;- Amhara
 Town:- Bahir Dar
 Type of project:- Plastic Carpet mat Production
 Status of the project:- loan processing

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  Project Objective: - To produce Plastic Carpet mat production at Commercial level for
local as well as export market from plastic wastes.
 Right of Occupancy:- Leased Land
1.3 Brief history of the Company
Gohar Plastic Carpet mat Production is owned by Gohar Trade and Apartment S.c. which was
established as per the commercial code of Ethiopia. This new project is located in Amhara
Regional State, Bahir Dar City Administration. It is established with an intention to engage in
Plastic Carpet mat Production at commercial level for local market.
1.4 Credit Information
1.4.1 Credit information with other banks
The Company has no any credit relation with other local as well as foreign banks.
1.5 Production and Sale Performance of the Company
Gohar Plastic Carpet mat Production is a newly established Plant. So that, there is no sales
performance registered during the intended time period.
1.6 Ethiopian Economic Policy and the Private Sector
1.6.1 The policy Environment
Ethiopia has set its own industrial policy and strategy as of August 2002. The industry
development strategy of the country has put in place the principles that primarily focus on the
promotion of agricultural lead industrialization, export lead development, and expansion of labor
intensive industries these principles are interdependent and inter linked to one another. The
strategy has also set the other principles that clearly stated the pivotal contribution of the private
sector, the leadership role of the Government, and the integrated and coordinated participation of
the public at large in nurturing the strategy. This strategy refers to those industries which are
primarily involved in the production of manufactured gods. Attempt has also been made to
include other industrial classified sectors in the document other than the manufacturing
industries.
1.6.2 The Seconded Five Year Growth and Transformation plan (2015/2016 -2019/2020)
The Seconded Five Year Growth and Transformation plan recently accelerated by the
Government is an important milestone laying the foundation for sustained economic and social
development in Ethiopia over the plan period. It is therefore, imperative to review the plan from
the outset to exactly know what it embraces in terms of economic growth objectives, goals and

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strategies, identified priority areas, and the role of the private sector in the implementation of the
plan. This gives opportunities to Gohar Plastic Carpet mat Production Project to exploit available
opportunities in this growth and transformation plan in terms of investment incentives and future
expansion.
1.7 Beneficiary of the of the project
Creating job opportunity especially to local people
Technology transfer to the sector
The regional of government collects employment tax, sale tax, revenue tax, land rent and
Vat
Produce Plastic Carpet mat production mainly for local Market.
1.8 Product description and application
PVC floor covering is a sheet with PVC lamination on the back which has plasticity and can be
plastered on the floor by adhesives. And the main purpose of using PVC floor covering is
interior decoration and they should be easy to be plastered, good interior decoration effect,
washable and durability quality, good heat insulation quality and high resistance to fungus and
moisture. Generally PVC floor covering is used in almost in all household interior decoration
application and is available in the market in rolls.

Due to the high traffic in a normal office that includes the movement of furniture, the scooting of
chairs, and the constant foot traffic, commercial office carpeting can wear out fairly quickly in
certain areas. But because of the lower cost of using commercial carpet squares, the replacement
of an entire office space can be done much less expensively than wall-to-wall carpeting. Not only
is the installation less expensive but the purchase of the carpeting can be 30 to 40% less
depending on the quality. Many building maintenance workers have the skills to replace carpet
squares without bringing in wall-to-wall carpet professionals, thereby taking advantage of
workers that are already on payroll instead of outsourcing to higher paid technicians
1.9 Justification of the project
Pvc Carpet products have increasingly entered the everyday lives of people more than any other
materials. Pvc Carpet products have found a wide range of applications in various sectors such as
construction, health care, and household necessities. Several factories are producing thin plastic
shopping bags, and others are producing plastic shoes for local purchase as well as a variety of
products.

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A constant supply of raw material to the factory is of utmost importance for the existence of the
business. It is possible to integrate in this system by letting them know that the factory is willing
to buy plastic wastes from collectors.
The main reasons for selection of this project are:-
Profitability of the business
Stable political climate;
Liberalized free market economy;
Conductive macroeconomic policies and stable foreign exchange regime;
Huge home market;
Abundant and inexpensive labor force;
Strategic location with proximity to the lucrative markets
Attractive incentive packages;
Participation in the privatization opportunities;
Protects the environment by collecting the waste plastics
The ever increase demand of the Plastic Carpet mat production in international and
domestic market
1.10 Supporting for the project
The supporting factor and good opportunities of the projects are:
Stable Economic Environment:
 Ethiopia has been able to achieve macro-economic stability
 Stable annual economic growth in double digits since 2003
 Stable exchange rate
 Government commitment to private sector
 Safe and secure working and living environments, identified by the U.N. and the
International Chamber of Commerce (ICC) as key assets for investors in Ethiopia
1.11 Goal and objective
1.11.1 Over all-goal
The factory produces Plastic Carpet mat products and maximizes the income of investors and
hence increases and improves the wealth of investor, employee and benefit the society round the
area.

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1.11.2 Objective of the Project
The main objective of the project is to provide to ensure high production of Plastic Carpet mat
products from waste plastics and PVC plastic resigns, to ensure and improve high income of the
promoter, to develop access to the international market for the product, and to improve the
foreign currency deposit and support the Economic Growth of the country.
1.12 Key Success and Risk Factors
This section briefly discusses key success and risk factors in terms of what the given project can
consider as opportunities and threats. The opportunities are further split into at macro, sector and
organization levels. While opportunities are contributing to the success of the company, threats
are averse to achieving company objectives and must be managed to mitigate the negative effects
on company’s performance.
1.12.1 Key Success Factors
A. Macro Specific Success Factors
 Continuous double digit economic growth which can significantly increase consumption
thereby deriving demand;
 Conducive economic policy for private investment and Government’s Commitment and
all rounded support;
 A large domestic market and a unique geographical location enabling investors in
Ethiopia to service markets and customers in East Africa.
B. Sector Specific Success Factors
 Special support by the Government to commercial in consideration as a bridge to
transform the economy from agriculture to industry;
 projects producing import substitute commodities receive a wide range of support
from the federal and Regional Governments;
1.13 SWOT Analysis
The envisaged project has the following strength, weakness, opportunities and threats.

 Strength
The promoter has great commitment that will assure for the Plastic Carpet mat
product business achievement.
Continuous availability of raw material, i.e. high volume of waste plastics
Availability of low cost labor

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 Product affordable to all income groups
Wide range of target market

 Opportunities
The envisaged project has a lot of opportunities like,
High demand of Pvc Carpet products in domestic market
Fewer competitors, in relation to domestic and international demand
Having of appreciable investment policy of the country
Abundant and cheap labor;
The strong support and incentives from the government;
Highly increasing Plastic Carpet mat product import price;
 Weaknesses
Inexperienced skilled labor in Plastic Carpet mat production process

 Threats
The project may not get adequate and sufficient financial and technical support on
the preferred time.
Price of inputs and spare part, and other overhead cost has been increasing from day
to day.
1.14 Mitigation Mechanisms for Weakness and Threats
A. Weaknesses
The company should hire professionals who have related experience with, Plastic
Carpet mat production factory.
B. Threats
Loan from Ethiopian Commercial Bank will solve the faces of machinery and
financial shortage to rum its activities adequately.
The company has to utilize continuous contractual base of supply of raw materials,
for its requirements to alleviate possible price fluctuations.

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2 Market feasibility Analysis
2.1 Market Potential
The proposed business mainly targets the domestic market of all region of the country. There
will be also international market in part even our products will be marketed in a domestic
market. The business is located within the industrial area of Bahir Dar city Administration. The
major target customers for the Plastic Carpet mat production are construction industries,
households, hotels, café and restaurants, offices, shops and so on.

2.2 Past Supply and Present Demand

The demand for PVC carpets is met through imports and domestic production. The total
domestic supply (domestic consumption) of carpets (i.e. imported and domestically produced net
of exports), during 2009 - 2018 is depicted in Table 1. PVC Carpets are mainly supplied from
imports. Domestic production of the product, on the average, covered about 20% of the total
supply during the period under consideration. The domestic production is from ABC plastic
factory plc, Tianjin Xinhai Carpet Co., Ltd and kaka carpets with a total capacity of 4,800 ton
per year. Exports of PVC carpets are negligible.

As shown in Table 1, total supply of carpets varied from 6,797.70 ton in 2009 to 15,485.00 in
2018. Imports and domestic production and total domestic supply of the product averaged at
8,891.7, 3,000, and 10,991.97 ton, respectively, during the period under reference.
Table 1: import of PVC carpets and domestic production (tons)

year imports production Total supply

2009 6,797.70 6,797.70
2010 7,268.00 7,268.00
2011 7,726.00 7,726.00
2012 7,893.00 1,200.00 9,093.00
2013 9,123.40 1,200.00 10,323.40
2014 8,769.00 3,000.00 11,769.00
2015 9,438.60 3,000.00 12,438.60
2016 10,324.25 3,000.00 13,324.25
2017 10,894.70 4,800.00 15,694.70
2018 10,685.00 4,800.00 15,485.00

Source: – Ethiopian Revenues & Customs Authority and CSA

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As could be seen form Table 1, there is a substantial growth in the imports of carpets. Total
imports of the product (in tons) on the average grew at the rate of 5% annually during the
reference period. To determine the present unsatisfied demand for the product average import of
the period under consideration is first assumed to reflect the demand for the year 2018. Then, a
modest estimate of average annual growth rate of 5% is applied to arrive at the current (year
2019) unsatisfied demand for the product. Thus, the current unsatisfied demand for the product
is estimated at 11,219.25 tons.
2.3 Demand Analysis
The major marketing task of the end-user is to identify markets for finished goods which can
utilize Plastic Carpet mat production. The end-user must also constantly re-examine what is
available through the handling and processing phases, so that they can evaluate markets for
finished products.

Plastics’ goods are dramatically increasing their use of reclaimed plastics in their production
processes. They are demanding high quality reclaimed plastic carpets for their consumer
products. Our company will produce plastic carpets. Demand for carpets is mainly influenced by
population growth, urbanization, economic growth (rise in income of the population). Given the
rapid population and economic growth, and the rate of urbanization in the country as well as the
substantially high average rate of growth of imports of the product (5%) observed during 2009-
2018, a modest estimate of 5% average annual growth rate is considered in projecting the
unsatisfied demand for carpets. The projected future unsatisfied demand for the product is shown
in Table 2.
Table 2: Projected Demands (Tons)
Year Projected Demand
2020 11,780.21
2021 12,369.22
2022 12,987.68
2023 13,637.07
2024 14,318.92
2025 15,034.87
2026 15,786.61
2027 16,575.94
2028 17,404.74
2029 18,274.98

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2.4 Pipeline projects in Pvc Carpet products manufacturing
The list of the companies which have ongoing projects on Pvc Carpet products manufacturing in
our country based on the data from regional and the federal investment commission are:
 Negash trading and Apartment plc…building stage
 Mohan plc …..secured the land
 Belaynesh and emebet plastic ps….. Building stage

2.5 Marketing Strategy

The proposed business is an entirely well adopted by the society and in the world generally. The
investors have to do a good marketing job to convince society to be users of the products. By
gathering continuous feedback about the product quality and price, the firm will make
satisfaction for the customers.
2.5.1 Promotion
The promoter of the project initially promotes the products using brochures & flyers which are
effective to reach the target market. The purpose is to make the customers aware about the
quality and benefits of the product. A continued promotional campaign using brochures may not
be required since the information will be disseminated through word-of-mouth after a while.
However, the project may still continue to use flyers to inform the student community about the
care to the facility and the requirements to be customers to the facility. With regard to the
promotional aspect, since the market is concentrated, word-of- mouth promotions are much more
effective and efficient than other forms of advertisements.
2.6 Pricing Strategy
The products are going to be marketed to the domestic market whose financial capacity &
purchasing power is limited. The price to be charged must therefore be affordable. The price may
initially be set at a level which covers operating costs plus some margin for the investor. Afield
survey was conducted to check as to how much is the price of Pvc Carpet products currently at
the market. The charge varies depending on the cost of inputs to produce each product outputs.
Our sales strategy involves continuing informal surveys of our customers about their preferences
and needs, and keeping an open mind about changes. The current retail price of imported plastic
materials, on average, is about Birr 63,050 per ton. Our PVC carpet product’s factory price is set
at Birr 48,500 per ton by deducting profit of retailers and distributors.

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2.7 Sales Forecast
The sales forecast is based on the assumption that we will sell all of the highest value Pvc Carpet
products that we can produce. The current retail price of imported plastic materials, on average,
is about Birr 63,050 per ton. Deducting for profit margin product’s factory price is set at Birr
48,500 per ton. The product being a factory input is bought in bulk. It can, therefore, be sold at
factory gate.
2.8 Distribution system
The total production amount will be marketed in the local market. The project domestic
Distribution network of the product is illustrated below.

MANUFACTURER

WHOLESALER

RETAILER

END USER

Figure 1: Distribution networks

2.9 Global Market tends of Ethiopia

Ethiopia has a large population and thus potentially one of the largest domestic markets in
Africa. Beyond the domestic market, by virtue of its membership of the Common Market for
Eastern and Southern Africa (COMESA), embracing 20 countries with a population of about 380
million, Ethiopia enjoys market access to these countries at preferential tariffs. Ethiopia’s
proximity to the Middle East also offers potential market opportunities. The country also
qualifies for preferential access to European markets under the EU’s Every-Thing-But-Arms
(EBA) initiatives and to US markets under the African Growth and Opportunity Act (AGOA).
This enables the project to export the Plastic Carpet mat production to Eastern and Southern
Africa via the COMESA common market when needed.

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3 Technical Analysis
3.1 Location of the project
Plastic Carpet mat production factory Project, with an area of 5,000m2, is located in Amhara
regional state, Bahir Dar City Administration, kebelle 16, industrial zone.
3.2 Civil Engineering Cost
The factory has a total land area of about 5000 m2. The cost of building which is under
construction is estimated to Birr 14,149,624.40.
Table 3: Project construction area and construction cost
No Description Total cost
1 Processing line 2,965,904.77
2 Raw material store and product store 3,681,367.17
3 Administrative Office & Cafeteria 2,123,624.40
4 Toilet and Shower Proposal 466,746.03
5 Guarding house 128,406.37
6 Fence proposal 1,036,038.90
Total land area 14,149,624.40

3.3 Plant capacity

Thus, given the expected demand for Pvc Carpet products and strings presented earlier, and the
planned technology, the envisaged plant is set to produce the technically minimum possible
2,400 ton PVC carpet products annually.

3.4 Production program

The program is scheduled based on the consideration that the envisaged plant will work 300 days
of two shifts in a year, where the remaining days will be holidays and for maintenance. During
the first year of operation the plant will operate at 80 percent capacity and then it grows to 90
percent in the 2nd year. The capacity will grow to 100 percent starting from the 3rd year. This
consideration is developed based on the assumption that market and logistics barriers would take
place for the first two years of operation.

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 Table 4: Annual production program
NO Description unit Production
1st 2nd 3-10
1 Plastic carpet mat Ton 1,920 2,160 2,400
Capacity utilization % 80% 90% 100%

3.5 Production Process

The proposed project aims to produce Plastic Carpet mat using modern machinery. The project
therefore requires a line of recycling machines and injection molding and other auxiliary
equipment.
Plastic waste and waste collection: - PVC type used plastic materials are the major inputs of the
process. These types of plastic materials are easily available around the planned recycling plant.

Increase in use of plastic materials of all sorts in household’s guarantees both the input and
output side. All of the input requirements of the production process can be secured from house-
to-house collection method. As most developing countries, availability of cheap labor makes
house-to-house collection economically viable.
Sorting and identification: - The sorting of collected plastics is required to determine the
appropriateness of the materials for further processing. It can be done either manually or
automatically. However, the use of cheap labor makes manual sorting both economically viable
and socially desirable.
Washing:-Washing eliminates dirt from the plastic. The main cleaning steps are:
 Draining of remaining fluids from containers into prepared collection barrels.
 Rough cleaning of plastic containers and other pieces of plastic.
 Removing of paper, plastic or metal stickers.
 Removing of caps.
 Intensive washing in cold or hot water with addition of detergents or caustic soda.
Cutting: - This process is essential for initial size reduction of large objects. It may be carried
out with scissors, saw or power machines such as chain saws.
Shredding:-This is suitable for smaller pieces. A typical shredder has a series of rotating blades
driven by electric motor, grids for size grading and a collection bin. Materials are fed into the

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shredder via a hopper which is suited above the blade rotor. The outputs of the machine are a pile
of coarse irregular shaped plastic flakes which can be further processed.
Pelletizing:-Mostly plastic flakes need to be converted into pellets before further processing.
The plastic pieces are fed into the extruder, are heated and then forced through a die to form
plastic spaghetti which can then be cooled in a water bath before being chopped into pellets.
Injection molding: - It is used to manufacture new products. The plastic polymer emerges
through a nozzle into a split mold. The quantity of polymer being forced out is carefully
controlled, usually by moving the screw forward in the heated barrel. A series of molds used to
allow continual production while cooling takes place. This type of technique is used to produce
molded products such as water fittings, conduits, buckets, barrels, etc.

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 Plastic waste

Collection

Sorting (identification)

Washing

Drying

Cutting

Shredding

Storage
Extruding/compounding

Pelletizing

Selling of pellets

Further processing

(Injection moulding)

The PVC carpet mat process: The production of plastic floor covering involves manufacturing
process such as blending, compounding, mixing, calendaring, cooling, surface design, inspection
and measuring as describes below.

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Blending: - Here ,the raw materials such as PVC, plasticizers, filler, stabilizers and other
additives are weighted according to the mixing ratio to be fed to blender to be blended ,evenly .
Compounding:- The mixture discharged from the blender is then intensively compounded by
intensive mixer.
Mixing:- The compound discharged from intensive mixer is uniformly mixed by the first two
roll mill and then by the second two roll mill.
Calendaring:- The compound is passed through the four rolls of calendar so that a flat film in
the desired thickness can be formed .
Cooling:- The film with paper laminated is passed through cooling equipment to be cooled.
Winding and surface design:- The film is lastly wounded by turret winder and further be
treated on strength of such auxiliary as embossing machine, printing machine, surface coating
machine, foaming embossing machine to produce variety of PVC floor covering/carpet design .
3.6 Plant Machinery and Equipment
The total cost of machinery and equipment is Birr 14.283 million. The list of machinery and
equipment required and cost estimated are shown in Table 5.
Table 5: List of machinery and equipment

Description Unit Qty Unit price Total price

Conical twin screw extruder Set 1
Hydraulic screen exchanger Set 1
Coat –hanger die/ mold Set 1
Three rollers calender machine Set 1
Cooling bracket Set 1
Edge cutting machine Set 1
Tractor Set 1
Tape storage machine Set 1
Recoiling machine Set 1
Electronic control system Set 1
Plastic mixer set 1
Plastic crusher set 1 4,832,787.44 4,832,787.44
Transformer No 1 4,750,650.00 4,750,650.00
Generator No 1 4,700,000.00 4,700,000.00
Total 14,283,437.44

17
 Table 6: Furniture and office equipment

Item Quantity Unit cost Total cost

Computer 5 15,000.00 75,000.00
Printer 2 10,000.00 20,000.00
Photocopy machine 1 50,000.00 50,000.00
Telephone sets 5 500.00 2,500.00
Leather sofa 1 set 93,200.00 93,200.00
Managerial table 1 22,000.00 22,000.00
Managerial conference table 1 17,000.00 17,000.00
Managerial file shelf 1 14,000.00 14,000.00
Fully mesh chair ergo. 1 24,300.00 24,300.00
Conference chair 8 4,300.00 24,300.00
Secretary Table L-shape 1 7,400.00 7,400.00
Secretary Chair mesh 1 5,500.00 5,500.00
Coffee table 1 4,500.00 4,500.00
Computer table 1 4,800.00 4,800.00
Mesh chair ergonomic 1 5,500.00 5,500.00
Cafeteria chair with wooden 20 2,000.00 40,000.00
Cafeteria table 10 1,800.00 18,000.00
Shelf 3 8,000.00 24,000.00
Total 452,000.00
Vat 15% 67,800.00
Grand total 519,800.00
Vehicles
Toyota hilux – double pickup 1 1,844,000.00 1,844,000.00
Coaster bus 1 2,841,000.00 2,841,000.00
FSR 2 2,383,695.66 4,767,391.32
Sub total 4 9,452,391.32
Title transfer fee (2%) 189,047.83
Total 9,641,439.15

18
3.7 Raw Materials and Inputs
The raw materials used for Pvc Carpet products are waste pp, HDPE (High Density Poly
Ethylene) polyethylene, PVC, polypropylene type waste plastic materials plasticizers and other
additives. The major raw material for the manufacture of plastic floor coverings PVC resin from
import and from recycling, plasticizer, and auxiliary raw materials such as filer, stabilizers,
pigments and other additives are all imported from abroad. From the raw materials 60% are
available locally. The raw materials will be mixed with specific percentage ratio to produce the
required grade and the annual requirement of those raw materials and their related cost is shown
in Table 8.
Table 7: Raw material requirements in Plastic household products production annually
No. Description UoM Qty. Unit cost Total Cost
1 waste pvc plastic resin Ton 1,068 32,000.00 34,176,000
2 Pvc resin powder Ton 442 38,400.00 16,972,800
3 plasticizer ton 13.50 12000 162,000
4 filler Ton 720 11,520.00 8,294,400
5 stabilizer Ton 219 24,000.00 5,256,000
6 pigments ton 13.5 57,600.00 777,600
7 other additives Ton 22 12,000.00 264,000
Total 65,902,800.00

3.8 Input output ratio

The input output ratio of the project means how much inputs are required to produce one unit of
output. So, to produce one ton of Pvc Carpet products the raw material requirement is:-
No. Description UoM Qty.
1 waste pvc plastic resin Ton 0.45
2 Pvc resin powder Ton 0.18
3 Plasticizer ton 0.01
4 Filler Ton 0.30
5 Stabilizer Ton 0.09
6 Pigments ton 0.01
7 other additives Ton 0.01
Total 1.05

19
3.9 Utilities Requirements
The major utilities required for the plant include electric power, water for general purpose, fuel
oil and diesel oil for the process, and fuel and lubricants for plant machinery and equipment. The
total annual requirement for utilities at full capacity production and the estimated costs are
shown in Table 8.

Table 8: Utility Expenses

No. Description Unit Qty. Unit price Total Cost
1 Electricity kWh 1,152,000.00 0.59 679,680.00
2 Water m3 212,000.00 8.20 1,738,400.00
3 furnace oil lt 12,000.00 16.00 192,000.00
4 fuel oil Lt 30,000.00 18.00 540,000.00
5 Telephone and internet Birr 60,000.00
Total 3,210,080.00

3.10 Project implementation schedule

The major activities to be carried during the project implementation period are grouped under the
following four major categories. These are:
1. Activation and organization activities
2. Operation activates
3. Construction and erection
4. Performance testing
3.10.1 Activation and organization activities
These are activities that need to be carried as a pre-requisite for the project to become operational
or they are preliminary activities. The tentative list of activities under this category is: Necessary
document collection, such as preliminary designs, plant layout, technological drawing of plant
and machinery, architectural drawing of the plant building and civil works and specification of
building, process machinery, auxiliary equipment’s and utility equipment, obtain investment
license and trade registration and ownership of project area submitting Feasibility Study and
other legal documents to the bank for financial arrangement. Most of these activities are
performed except the loan process.
3.10.2 Operational activities
The project operational activities will actually start after securing the land from the industry
park office. And the next activity will be organizing the project management and undertaking
steps to get the required fund from lending banks and concluding financial agreement.

20
Establishing project criteria early before starting design, is critical to the success of the optimized
project. The team entity must develop a clear, mutually held understanding of all project and
team entity goals, values, and objective. A concise description of project scope and program,
along with a preliminary budget aligned with the scope is vital to setting a project up for success.
3.10.3 Construction and Erection
The development of a construction plan is very much analogous to the development of a good
facility design. The time schedule for construction and erection has been standardized through
identification of the following requirements.
3.10.4 Performance testing activities
Performance testing will be carried right after completion of plan Erection and the normal
production operation of the plan starts after 12 months of project implementation. Training of the
recruited personnel is carried out within a period a month.
Table 9: Project implementation schedule
No Activity First year quarters
1. Activation and organization activities 1 2 3 4
Preparing necessary documentation
Procuring consultant for detailed project design
Architectural and Engineering design work
Plan check approvals secured
Procuring construction consultants
2. Operational activates
Recruiting project implementing staff
Completing financial arrangements
Arrangement for acquisition of machinery & equipment
3 Construction Erection
Site facility establishing & material mobilization
Site preparation and foundation work
Super structure construction
Finishing the civil work
Erection of machinery
4 Performance testing & production activities
Training of recruited personal
Performance testing

21
4 Organization Management and Man Power Analysis
4.1 Organization Structure
The highest executive body of Gohar Plastic Carpet mat production factory is Mr. Gohar Trade
and Apartment S.c. is the General Manager. The General Manager is responsible in planning
organizing and monitoring the overall operation of the plant. Accordingly, the General Manager
is responsible in planning organizing and monitoring the overall operation of the Plant.
Accordingly the factory is planned to be organized under a General Manager four Departments
and four sections; manly, financial Technical, human resource administration and Marketing.
Under the four Departments there are four Divisions which are directly related operation
activities. The revised organizational chart including major departments and process divisions is
depicted as follows:
General
Manager
Legal excutive
Advisor secrtetary
HR
Marketing finance Technical adminstratio
Department Department Department n
Department
quality
purchser Accountant perssonel
controller

seller casher supervisor secretary

store keeper secretary operator driver

secretary shift leader messenger

chemist guard

electrician cleaner

unskilled
mechanic
labor
opretor
helper

secretary

Figure 2:- Organization structure of Gohar Plastic Carpet mat Production.

22
4.2 Management
The project has proposed that the general manager of the captioned factory is responsible to
manage will have relevant experience in the sector and good educational background to run the
business smoothly and efficiently. Nevertheless, as he has plant management experience the unit
managers of the project assumed that they will have relevant experience related to Plastic Carpet
mat production and they will play great role for the successfulness of the project. Other
department managers as proposed in the organizational structure are expected to have strong
qualified and experienced staff to implement and run the plant/ project smoothly.
4.3 Stockholders analysis
Commercial Bank of Ethiopia: Provides loan to solve the faces of machinery and financial
shortage to rum its activities adequately.
Federal Revenue and Custom Authorities: - Allow the machinery and equipment to enter the
country without tax and duty free based on supporting letter and proclamation.
Regional investment agency /office and Bureau:- it gives investment license, supporting
letters for Banks, revenue and customs authorities and others
Environmental protection, land administration and Use Bureau:- audit and follow up the
performance environmental impact related issue, giving supporting letters for other sectors
whom may be it concern.
Regional Woreda and Kebelle revenue authority: - they collect land rent, Employ tax, Sale
tax and others incentives. They provide clearance and supporting letters to concerned body.
The community round the project: - they are the first beneficiaries to get job opportunities or
the source of labor, share the experience about technology usage. The project and society are
mutual interaction each other’s in different issues.
4.4 Manpower requirement
For smooth operation of factory projects effective, efficient and best management system and
technical personnel should be put in place with complete and qualified management staff
implementation and operational phases. The project is involved in Pvc Carpet products
production sector that is producing of House in Amhara regional state, Bahir Dar City
Administration, industrial zone. Even if factory is labor intensive by its nature there is
availability of skilled and semi-skilled man power in the country. So the company will not have
professional scarcity since, different universities in Ethiopia has conducting various training

23
related to agriculture and daily laborers from local markets. Thus there is no significant problem
in hiring skilled consulting staff as well as semi-skilled manpower can access from local market.
Table 10: Man power required for the project
S/N Description No Monthly salary Annual salary
1 General Manager 1 10,000.00 120,000.00
2 Secretary 3 2,500.00 90,000.00
3 Production & Technical Head 1 8,000.00 96,000.00
4 Marketing Head 1 8,000.00 96,000.00
5 Finance & Administration Head 1 8,000.00 96,000.00
6 Personnel 3 4,000.00 144,000.00
7 Accountant 2 4,000.00 96,000.00
8 Accounts Clerk 2 3,000.00 72,000.00
9 Cashier 3 3,000.00 108,000.00
11 Sales person 4 4,000.00 192,000.00
12 Purchaser 3 3,000.00 108,000.00
13 Store Keeper 2 10,000.00 240,000.00
14 Quality Controller 2 8,000.00 192,000.00
15 Shift Leader 2 4,000.00 96,000.00
16 Operator 30 3,500.00 1,260,000.00
17 Assistant Operator 30 2,500.00 900,000.00
18 Laborers 40 1,200.00 576,000.00
19 Mechanic 2 4,000.00 96,000.00
20 Electrician 2 4,000.00 96,000.00
21 Driver 2 4,200.00 100,800.00
22 Guard 6 1,200.00 86,400.00
23 Janitor 6 1,000.00 72,000.00
Sub Total 148 101,100.00 4,933,200.00
Employee Benefit (10%) 493,320.00
Grand Total 7,472,160

4.5 Manpower Training

For effective and efficient operational activity of the project the project will conduct different
training programs both in local as well as in a broad for better performance of the employees
who will recruit in the project.

24
5 Financial Analysis
5.1 Underlying Assumption
The financial analysis of Plastic Carpet mat production factory business to be expanded is based
on the data provided in the preceding chapters and the following assumptions.
Table 11: Financial Assumptions for the project
Finance
Project life 10 year
Source of finance 25% equity and 75% loan
Bank interest rate 12%
Discount for cash flow 12%
Raw material cost increments 5%
Utilities cost increment 10%
Salary increment 5%
Depreciation
Machinery and equipment 10%
Building 5%
Table 12: Pre- Capital Expenditures
No Category Total (Birr
1 Engineering, Design & consultancy fee 60,000.00
2 Training 100,000.00
3 Commissioning and test run with 10% contingency 50,000.00
4 Other pre-production expenses 50,000.00
Total 260,000

5.2 Working capital

The working capital requirement of the project is for those items which must be paid during/or at
the end of the first month of operation. The total working capital required is birr 13,683,154.17.

25
 Table 13: Initial working capital
No Description Total working capital
1 Raw Material and Inputs 10,983,800.0
2 Utilities 802,520.0
3 Maintenance and repair (5%) 611,116.9
4 Labor direct 546,260.0
5 Overhead cost 150,000.0
6 Administration Costs 150,000.0
7 Cost of marketing and distribution 150,000.0
8 Insurance 289,457.3
Total 13,683,154.17

5.3 Total Investment Outlay

The determination of project costs especially recurrent costs is assumed using their opportunity
cost the fixed investment expenses include cost of equipment, furniture, vehicle, utilities, salaries
and benefits and administrative costs. The investment cost of the project including working
capital is estimated at Birr 52.591 million.
Table 14: Total investment cost
No Item Total
1 Fixed asset
1.1 Land 54,000.00
1.2 Building 14,149,624.40
1.3 machinery Equipment 14,283,437.44
1.6 Vehicles 9,641,439.15
1.7 office equipment 519,800.00
Total Fixed investment 38,648,300.99
2 Pre-Production 260,000.00
3 Working capital at full capacity 13,683,154.17
Total 52,591,455.16
Equity 25% 13,147,863.79
Loan 75% 39,443,591.37

26
5.4 Source of fund for the project
The total planned investment cost required is Birr 52,591,455.16 of which the financing of the
project consists of bank loan and promoter’s equity. Consequently, out of the total investment
cost 75 % (39,443,591.37) is loan requirement from the commercial Bank of Ethiopia and the
left 3025 %(13,147,863.79) birr is equity contribution.

5.4 Production cost

The annual production cost at full operation capacity for the project is estimated at Birr
77,954,079.97 (see Table 15). The cost of raw material account for 85% of the production cost.
The other major components of the production cost are depreciation, marketing cost, labor, repair
and maintenance, labor overhead, administration cost and utility which account the remaining
15% share. For detail production cost see table 15.
Table 15: Annual production cost at full capacity

Items Cost (in Birr) %

Raw Material and Inputs 65,902,800.00 85%
Utilities 3,210,080.00 4%
Maintenance and repair (5%) 1,222,233.83 2%
Labor direct 3,277,560.00 4%
Labor overheads 300,000.00 0%
Administration Costs 300,000.00 0%
Cost of marketing and distribution 300,000.00 0%
Total Operating Costs 74,512,673.83 96%
Depreciation 3,151,948.88 4%
Insurance 289,457.26 0%
Total Production Cost 77,954,079.97 100%

5.5 Investment Appraisal

As far as the investor in a business is concerned, the investment criterion overruling all other
project related business objectives is the financial feasibility of an investment project. This
means that the financial return on total invested capital must be sufficiently high. Although
sufficient returns are essential for a project to be approved, investments must be justified usually

27
within a wider context, which for investors and financiers include any gains, whether net profits
or non-cash benefits, resulting directly or indirectly from an investment. In the case of this
project, since the financing plan is not sophisticated, the following appraisal methods are almost
sufficient to guide the final decision of pursuing on the project or not.

5.5.1 Profitability
Based on the projected profit and loss statement, the project will generate a profit throughout its
operation life. Annual net profit after tax will grow from Birr 23.313 million to Birr 41.003
million during the life of the project. Moreover, at the end of the project life the accumulated net
cash flow amounts to Birr 259,025,247.35.
5.5.2 Ratios
In financial analysis financial ratios and efficiency ratios are used as an index or yardstick for
evaluating the financial position of a firm. It is also an indicator for the strength and weakness of
the firm or a project. Using the year-end balance sheet figures and other relevant data, the most
important ratios such as return on sales which is computed by dividing net income by revenue,
return on assets (operating income divided by assets), return on equity (net profit divided by
equity) and return on total investment (net profit plus interest divided by total investment) has
been carried out over the period of the project life and all the results are found to be satisfactory.
Table 16: Financial Ratio’s

RATIOS Y-1
ROI 0.44
ROE 1.77
ROS 0.25

5.5.3 Break-even Analysis

The break-even analysis establishes a relationship between operation costs and revenues. It
indicates the level at which costs and revenue are in equilibrium. To this end, the break-even
point for capacity utilization and sales value estimated by using income statement projection are
computed as followed.

28
 Fixed costs: 38,594,300.99
Sales price per unit: 48,500
Variable cost per unit: 27,459.50
Break-even point (units): 1,834
Break-even point (total sales): 88,962,885.76

5.5.4 Pay-back Period

The pay- back period, also called pay – off period is defined as the period required for recovering
the original investment outlay through the accumulated net cash flows earned by the project.
Accordingly, based on the projected cash flow it is estimated that the project’s initial investment
will be fully recovered within 2.26 years.
5.5.5 Internal rate of return
The internal rate of return (IRR) is the annualized effective compounded return rate that can be
earned on the invested capital, i.e., the yield on the investment. Put another way, the internal rate
of return for an investment is the discount rate that makes the net present value of the
investment's income stream total to zero. It is an indicator of the efficiency or quality of an
investment. A project is a good investment proposition if its IRR is greater than the rate of return
that could be earned by alternate investments or putting the money in a bank account.
Accordingly, the IRR of this project is computed to be 45% indicating the viability of the project.

5.5.6 Net Present Value

Net present value (NPV) is defined as the total present (discounted) value of a time series of cash
flows. NPV aggregates cash flows that occur during different periods of time during the life of a
project in to a common measuring unit i.e. present value. It is a standard method for using the
time value of money to appraise long-term projects. NPV is an indicator of how much value an
investment or project adds to the capital invested. In principle, a project is accepted if the NPV is
non-negative.
Accordingly, the net present value of the project at 12% discount rate is found to be Birr
159,877,818.74 which is acceptable.

29
6 Economic Feasibility
6.1 Profit Generation
The project is found to be financially viable and earns on average a profit of birr
33,275,174.67 per year. Such result induces the project promoters to reinvest the profit which,
therefore, increases the investment magnitude in the region.
6.2 Tax Revenue
In the project life under consideration, the region will collect about birr 10,328,793.48 averagely
from corporate tax payment alone per year (i.e. excluding income tax, sales tax and VAT). Such
result create additional fund for the regional government that will be used in expanding public
infrastructures and other basic services in the region.

6.3 Employment and Income Generation

The proposed project is expected to create additional employment opportunity to several citizens
of the region. That is, it will provide permanent employment to 149 professionals as well as
support staffs. This would be one of the commendable accomplishments of the project.

7 Political feasibility
The project has its own smart structure. Any internal problem will be solved using the structure.
The project will not be contradicted with the country policy which is likely the selective smart
idea. As far as the political instability is concerned our country is politically stable than other
times. Furthermore, Bahir Dar is located not in the boarder of the country but almost in the
middle. So, the project has no political doubt for the country.

30
 8 APPENDIX
Appendix 1A: Sales projection volume in birr
Description year-1 year-2 year-3 year-4 year-5
PVC Carpet in tons 1,920.00 2,160.00 2,400.00 2,400.00 2,400.00
Unit price 48,500.00 50,925.00 53,471.25 56,144.81 58,952.05
Total sales 93,120,000 109,998,000 128,331,000 134,747,550 141,484,928
Appendix 1B: Sales projection volume in birr
Description year-6 year-7 year-8 year-9 year-10
Pvc Carpet products in tons 2,400.00 2,400.00 2,400.00 2,400.00 2,400.00
Unit price 61,899.66 64,994.64 68,244.37 71,656.59 75,239.42
Total sales 148,559,174 155,987,133 163,786,489 171,975,814 180,574,604

Appendix 2: Depreciation forecasting

No Cost Items Original value Depreciation and Amortization % Annual depreciation
1 Building and civil work 14,149,624.40 5% 707,481.22
2 Machinery and equipment 14,283,437.44 5% 1,428,343.74
3 Vehicles 9,641,439.15 10% 964,143.91
4 Office furniture and equip. 519,800.00 10% 51,980.00
Total 38,594,300.99 3,151,948.88

1
 Appendix 3: annual repair and maintenance expenses
No Cost Items original value Repair and Maintenance rate Annual maintenance cost
1 Machinery and equipment 14,283,437.44 5% 714,171.87
2 Vehicles 9,641,439.15 5% 482,071.96
3 Office furniture and equip. 519,800.00 5% 25,990.00
Total 24,444,676.59 1,222,233.83

Appendix-4 loan repayment schedule

Loan Amount 39,443,591.37 Scheduled Payment 6,980,891.05
Annual Interest Rate 12.00 % Scheduled Number of Payments 10.00
Loan Period in Years 10 Actual Number of Payments 10.00
Number of Payments Per Year 1 Total Early Payments -
Start Date of Loan 7/28/2020 Total Interest 30,365,319.13
Pm. Payment Beginning Scheduled Total Payment Principal Interest Ending Cumulative
No. Date Balance Payment Balance Interest
1 7/28/2021 39,443,591.37 6,980,891.05 6,980,891.05 2,247,660.09 4,733,230.96 37,195,931.28 4,733,230.96
2 7/28/2022 37,195,931.28 6,980,891.05 6,980,891.05 2,517,379.30 4,463,511.75 34,678,551.99 9,196,742.72
3 7/28/2023 34,678,551.99 6,980,891.05 6,980,891.05 2,819,464.81 4,161,426.24 31,859,087.18 13,358,168.96
4 7/28/2024 31,859,087.18 6,980,891.05 6,980,891.05 3,157,800.59 3,823,090.46 28,701,286.59 17,181,259.42
5 7/28/2025 28,701,286.59 6,980,891.05 6,980,891.05 3,536,736.66 3,444,154.39 25,164,549.93 20,625,413.81
6 7/28/2026 25,164,549.93 6,980,891.05 6,980,891.05 3,961,145.06 3,019,745.99 21,203,404.87 23,645,159.80
7 7/28/2027 21,203,404.87 6,980,891.05 6,980,891.05 4,436,482.47 2,544,408.58 16,766,922.40 26,189,568.38
8 7/28/2028 16,766,922.40 6,980,891.05 6,980,891.05 4,968,860.36 2,012,030.69 11,798,062.04 28,201,599.07
9 7/28/2029 11,798,062.04 6,980,891.05 6,980,891.05 5,565,123.60 1,415,767.45 6,232,938.44 29,617,366.52
10 7/28/2030 6,232,938.44 6,980,891.05 6,232,938.44 5,484,985.82 747,952.61 - 30,365,319.13

2
 Financial Statements
The basic financial statements of the project for the next 10 years i.e. Projected Income Statement, Projected Balance Sheet and
Projected Cash Flow Statement are presented below.
Appendix 5A: Projected Income statement
Description Year 1 Year 2 Year 3 Year 4 Year 5
Total Sales 93,120,000.00 109,998,000.00 128,331,000.00 134,747,550.00 141,484,927.50
COGS 52,722,240.00 62,278,146.00 72,657,837.00 76,290,728.85 80,105,265.29
Gross profit 40,397,760.00 47,719,854.00 55,673,163.00 58,456,821.15 61,379,662.21
Expenses
Utility expense 3,210,080 3,531,088.00 3,884,196.80 4,272,616.48 4,699,878.13
Salary & benefit 3,277,560.00 3,441,438.00 3,613,509.90 3,794,185.40 3,983,894.66
Admin. Cost 600,000.00 630,000.00 661,500.00 694,575.00 729,303.75
Overhead cost 300,000.00 315,000.00 330,750.00 347,287.50 364,651.88
Maintenance & repair 1,222,233.83 1,222,233.83 1,222,233.83 1,222,233.83 1,222,233.83
Depreciation & amortize. 3,151,948.88 3,151,948.88 3,151,948.88 3,151,948.88 3,151,948.88
Insurance 289,457.26 289,457.26 289,457.26 289,457.26 289,457.26
Marketing & promotion 300,000.00 300,000.00 300,000.00 300,000.00 300,000.00
Interest 4,733,230.96 4,463,511.75 4,161,426.24 3,823,090.46 3,444,154.39
Total expenses 17,084,510.93 17,344,677.72 17,615,022.90 17,895,394.80 18,185,522.77
EBT 23,313,249.07 30,375,176.28 38,058,140.10 40,561,426.35 43,194,139.43
Income Tax (30%) 12,168,427.90 12,958,241.83
Net Income 23,313,249.07 30,375,176.28 38,058,140.10 28,392,998.44 30,235,897.60
Withdrawal (20%) 4,662,649.81 6,075,035.26 7,611,628.02 5,678,599.69 6,047,179.52
Retained earning 18,650,599.26 24,300,141.02 30,446,512.08 22,714,398.76 24,188,718.08

3
 Appendix 5B: Projected Income statement
Gross Sales Year 6 Year 7 Year 8 Year 9 Year 10
Total Sales 148,559,173.88 155,987,132.57 163,786,489.20 171,975,813.66 180,574,604.34
COGS 84,110,528.56 88,316,054.98 92,731,857.73 97,368,450.62 102,236,873.15
Gross profit 64,448,645.32 67,671,077.58 71,054,631.46 74,607,363.04 78,337,731.19
Expenses
Utility expense 5,169,865.94 5,686,852.53 6,255,537.79 6,881,091.57 7,569,200.72
Salary & benefit 4,183,089.40 4,392,243.87 4,611,856.06 4,842,448.86 5,084,571.31
Admin. Cost 765,768.94 804,057.38 844,260.25 886,473.27 930,796.93
Overhead cost 382,884.47 402,028.69 422,130.13 443,236.63 465,398.46
Maintenance & repair 1,222,233.83 1,222,233.83 1,222,233.83 1,222,233.83 1,222,233.83
Depreciation & amortize. 3,151,948.88 3,151,948.88 3,151,948.88 3,151,948.88 3,151,948.88
Insurance 289,457.26 289,457.26 289,457.26 289,457.26 289,457.26
Marketing & promotion 300,000.00 300,000.00 300,000.00 300,000.00 300,000.00
Interest 3,019,745.99 2,544,408.58 2,012,030.69 1,415,767.45 747,952.61
Total expenses 18,484,994.70 18,793,231.03 19,109,454.88 19,432,657.74 19,761,560.00
EBT 45,963,650.62 48,877,846.55 51,945,176.58 55,174,705.29 58,576,171.18
Income Tax (30%) 13,789,095.18 14,663,353.97 15,583,552.97 16,552,411.59 17,572,851.36
Net Income 32,174,555.43 34,214,492.59 36,361,623.61 38,622,293.71 41,003,319.83
Withdrawal (20%) 6,434,911.09 6,842,898.52 7,272,324.72 7,724,458.74 8,200,663.97
Retained earning 25,739,644.35 27,371,594.07 29,089,298.88 30,897,834.97 32,802,655.86
Total profit 332,751,746.66
Average 33,275,174.67

4
 Appendix 6A: Projected Balance Sheet
Description Year 1 Year 2 Year 3 Year 4 Year 5
ASSET
Current Asset
Cash 13,913,154.17 19,554,888.05 44,489,598.66 75,268,594.80 97,977,141.85
Finished goods inventory 8,289,227.56 8,073,251.25 7,690,743.42 7,203,583.64
Raw material inventory 5,526,151.71 5,382,167.50 5,127,162.28 4,802,389.09
Total current asset 13,913,154.17 33,370,267.32 57,945,017.41 88,086,500.50 109,983,114.58
Fixed assets
Land 300,000.00 300,000.00 300,000.00 300,000.00 300,000.00
Building and infrastructure 14,149,624.40 13,442,143.18 12,770,036.02 12,131,534.22 11,524,957.51
vehicles 9,641,439.15 8,764,944.68 7,968,131.53 7,243,755.93 6,585,232.67
Machinery and equipment 14,283,437.44 12,855,093.70 11,569,584.33 10,412,625.89 9,371,363.30
Furniture and equipment 519,800.00 472,545.45 429,586.78 429,586.78 390,533.43
Total fixed asset 38,894,300.99 35,834,727.01 33,037,338.65 30,517,502.82 28,172,086.91
Total asset 52,807,455.16 69,204,994.33 90,982,356.06 118,604,003.32 138,155,201.49
Liabilities and owners’ equity
Long term liabilities
Lease payable 216,000.00 210,600.00 205,200.00 199,800.00 194,400.00
Long term debt 39,443,591.37 37,195,931.28 34,678,551.99 31,859,087.18 28,701,286.59
Total long term liabilities 39,659,591.37 37,406,531.28 34,883,751.99 32,058,887.18 28,895,686.59
Owners’ equity
Paid up capital 13,147,863.79 13,147,863.79 13,147,863.79 13,147,863.79 13,147,863.79
Retained earning 18,650,599.26 42,950,740.28 73,397,252.36 96,111,651.11
Total capital 13,147,863.79 31,798,463.05 56,098,604.07 86,545,116.15 109,259,514.90
Total capital and liabilities 52,807,455.16 69,204,994.33 90,982,356.06 118,604,003.32 138,155,201.49

5
 Appendix 6B: Projected Balance Sheet
Description Year 6 Year 7 Year 8 Year 9 Year 10
ASSET
Current Asset
Cash 121,781,072.15 146,711,520.31 172,798,580.80 200,070,968.20 228,555,628.44
Finished goods inventory 6,576,399.34 5,864,347.21 5,034,279.33 4,135,443.19 3,136,896.13
Raw material inventory 4,384,266.23 3,909,564.81 3,356,186.22 2,756,962.13 2,091,264.09
Total current asset 132,741,737.72 156,485,432.33 181,189,046.35 206,963,373.52 233,783,788.66
Fixed assets
Land 300,000.00 300,000.00 300,000.00 300,000.00 300,000.00
Building and infrastructure 10,948,709.63 10,401,274.15 9,881,210.44 9,387,149.92 8,917,792.43
vehicles 5,986,575.15 5,442,341.05 4,947,582.77 4,497,802.52 4,088,911.38
Machinery and equipment 8,434,226.97 7,590,804.28 6,831,723.85 6,148,551.46 5,533,696.32
Furniture and equipment 390,533.43 355,030.39 355,030.39 322,754.90 322,754.90
Total fixed asset 26,060,045.19 24,089,449.87 22,315,547.46 20,656,258.81 19,163,155.03
Total asset 158,801,782.91 180,574,882.20 203,504,593.80 227,619,632.33 252,946,943.69
Liabilities and owners’ equity
Long term liabilities
Lease payable 189,000.00 183,600.00 178,200.00 172,800.00 167,400.00
Long term debt 25,164,549.93 21,203,404.87 16,766,922.40 11,798,062.04 6,232,938.44
Total long term liabilities 25,353,549.93 21,387,004.87 16,945,122.40 11,970,862.04 6,400,338.44
Owners’ equity
Paid up capital 13,147,863.79 13,147,863.79 13,147,863.79 13,147,863.79 13,147,863.79
Retained earning 120,300,369.20 146,040,013.54 173,411,607.61 202,500,906.50 233,398,741.46
Total capital 133,448,232.99 159,187,877.33 186,559,471.40 215,648,770.29 246,546,605.25
Total capital and liabilities 158,801,782.91 180,574,882.20 203,504,593.80 227,619,632.33 252,946,943.69

6
 Appendix 7A: Projected cash flow statement
Description year 0 Year 1 Year 2 Year 3 Year 4 Year 5
INFLOW
Equity 13,147,863.79
Loan 39,443,591.37
Sales revenue 93,120,000.00 109,998,000.00 128,331,000.00 134,747,550.00 141,484,927.50
Total cash inflow 93,120,000.00 109,998,000.00 128,331,000.00 134,747,550.00 141,484,927.50
Cash out flow
COGS 52,722,240.00 62,278,146.00 72,657,837.00 76,290,728.85 80,105,265.29
Total operating costs 13,932,562.05 14,192,728.84 14,463,074.03 14,743,445.92 15,033,573.89
Income tax - - - 12,168,427.90 12,958,241.83
Loan repayment 2,247,660.09 2,517,379.30 2,819,464.81 3,157,800.59 3,536,736.66
Withdrawal 4,662,649.81 6,075,035.26 7,611,628.02 5,678,599.69 6,047,179.52
Total Cash outflow 73,565,111.95 85,063,289.39 97,552,003.86 112,039,002.95 117,680,997.20
Investment 52,591,455.16
Net inflow (52,591,455.16) 19,554,888.05 24,934,710.61 30,778,996.14 22,708,547.05 23,803,930.30
Cumulative cash 19,554,888.05 44,489,598.66 75,268,594.80 97,977,141.85 121,781,072.15

7
 Appendix 7B: Projected cash flow statement
Description Year 6 Year 7 Year 8 Year 9 Year 10
Inflow
sales revenue 148,559,173.88 155,987,132.57 163,786,489.20 171,975,813.66 180,574,604.34
Total cash inflow 148,559,173.88 155,987,132.57 163,786,489.20 171,975,813.66 180,574,604.34
Cash out flow
COGS 84,110,528.56 88,316,054.98 92,731,857.73 97,368,450.62 102,236,873.15
Total operating costs 15,333,045.82 15,641,282.15 15,957,506.01 16,280,708.86 16,609,611.13
Income tax 13,789,095.18 14,663,353.97 15,583,552.97 16,552,411.59 17,572,851.36
Loan Repayment 3,961,145.06 4,436,482.47 4,968,860.36 5,565,123.60 5,484,985.82
Withdrawal 6,434,911.09 6,842,898.52 7,272,324.72 7,724,458.74 8,200,663.97
Total Cash outflow 123,628,725.71 129,900,072.09 136,514,101.80 143,491,153.42 150,104,985.42
Investment
Net inflow 24,930,448.17 26,087,060.48 27,272,387.40 28,484,660.24 30,469,618.92
cumulative cash balance 146,711,520.31 172,798,580.80 200,070,968.20 228,555,628.44 259,025,247.35

8
 Appendix-8A Net present value of income (Discounting@12%)
Description Year 1 Year 2 Year 3 Year 4 Year 5
CF 19,554,888.05 24,934,710.61 30,778,996.14 22,708,547.05 23,803,930.30
Discount factor 1 0.89 0.8 0.71 0.64
PV of income 19,554,888.05 22,191,892.44 24,623,196.92 16,123,068.40 15,234,515.39
cumulative pv of CF 19,554,888.05 41,746,780.49 66,369,977.41 82,493,045.81 97,727,561.20

Appendix-8B Net present value of income (Discounting @12%)

Description Year 6 Year 7 Year 8 Year 9 Year 10
CF 24,930,448.17 26,087,060.48 27,272,387.40 28,484,660.24 30,469,618.92
Discount factor 0.57 0.51 0.45 0.4 0.36
PV of income 14,210,355.45 13,304,400.85 12,272,574.33 11,393,864.10 10,969,062.81
cumulative pv of CF 111,937,916.65 125,242,317.50 137,514,891.83 148,908,755.93 159,877,818.74

 IRR = 45%